Editor's Note:

Our DOW candidate has been promoted to the play list in our New Plays section tonight.



New Watch List Entries

DPS - Dr. Pepper Snapple

INTC - Intel Corp.


Active Watch List Candidates

HSY - Hershey Co.

T - AT&T Inc.

ZMH - Zimmer Holdings


Dropped Watch List Entries

UNP graduated to the play list. DOW has been promoted to a new play tonight.



New Watch List Candidates:


Dr. Pepper Snapple Group, Inc. - DPS - close: 39.28

Company Info

If you look at a weekly chart of DPS you can see that shares have been trading in a very wide range over the last several months from the $34 area to the $40 level. You could argue that the lows near $34 (actually closer to $33.65) form a bullish double bottom. If DPS can breakout past $40.00 it could herald the beginning of another leg higher.

The recent high was $40.43. I am suggesting a breakout trigger to launch bullish positions at $40.55. If triggered we'll use a stop loss at $37.95. Our long-term target is $46.00. Unfortunately, DPS does not have LEAPS so we'll have to use the October 2011 calls.

Breakout trigger: $40.55

BUY the 2011 October $40 calls (DPS1119K40) current ask $2.30

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BUY the 2011 October $45 calls (DPS1119K45) current ask $0.80

Chart of DPS:

Originally listed on the Watch List: 05/07/11


Intel Corp. - INTC - close: 23.25

Company Info

Semiconductor giant Intel has been underperforming the market and its peers for months. That changed about three weeks ago when the company delivered an earnings report that was much more bullish than expected. Shares have been surging higher ever since and on big volume. The breakout past resistance near $22.00 was another bullish development. Yet now INTC is overbought.

I am suggesting we launch bullish positions on a dip at $22.25 since $22.00 should now be new support. Our long-term targets are the $26-28 zone. If triggered we'll use a stop loss at $20.75.

Buy-the-Dip trigger: $22.25

BUY the 2012 Jan. $22.50 call (INTC1221A22.5) current ask $2.26

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BUY the 2013 Jan. $22.50 call (INTC1319A22.5) current ask $3.20

Chart of INTC:

Long-term Chart of INTC:

Originally listed on the Watch List: 05/07/11


Active Watch List Candidates:



Hershey Co. - HSY - close: 56.06

05/07 update: HSY has started to see some profit taking but shares remain very overbought with the three-month rally from $46. We are waiting for a deeper correction. The plan is to open bullish positions at $53.00.

If triggered at $53.00 we'll use a stop loss at $49.45. Our long-term targets are $60 and $64.

Buy-the-Dip trigger: $53.00

BUY the 2012 $55 calls (HSY1221A55)

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BUY the 2013 $55 calls (HSY1319A55)

Originally listed on the Watch List: 04/02/11


AT&T - T - close: 31.26

05/07 update: AT&T managed to tag a new two-year high this past week. Shares were relatively resilient to the market's correction lower. Yet in spite of this strength the stock looks vulnerable. I am expecting a dip towards $30.00. We will raise our buy-the-dip entry point from $29.25 to $30.25. We'll move our stop loss up to $28.45. Our long-term target is the $36-40 zone.

Buy-the-Dip trigger: $30.25 <-- new trigger

BUY the 2012 January $30.00 call (T1221A30)

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BUY the 2013 January $30.00 call (T1319A30)

Originally listed on the Watch List: 04/09/11


Zimmer Holdings, Inc. - ZMH - close: 67.50

05/07 update: ZMH displayed relative strength last week. Shares did not participate in the market's pull back and rallied to a new high on Friday. The overall pattern is bullish but ZMH looks short-term overbought. We don't want to chase it. Currently our buy-the-dip trigger is at $63.00 but readers might want to consider raising their entry point. If we are triggered a $63.00 I am suggesting a stop loss at $59.35, under the April low. Our long-term targets are $78.50 and $88.50, although the high $80s might be a little optimistic.

Buy-the-Dip trigger: $63.00

BUY the 2012 Jan. $70 call (ZMH1221A70)

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BUY the 2013 Jan. $70 call (ZMH1319A70)

Originally listed on the Watch List: 04/30/11